Sustainable Benefits Task Force

1. Sustainable Benefits Task Force Town Hall Meetings April 2011

2. Town Hall Agenda • Review SBTF Membership & Charge • Outline what we have learned: • Cost of USF Benefits • Healthcare Reform • Comparative Data • USF Survey • Other practices & market trends • Present options under consideration • Q & A

3. "Let me state unequivocally that the university administration has no pre-conceived notions about how to address the skyrocketing cost of our benefits package. We have convened the 17-member Benefits Task Force as a first and vital step in helping the university provide a solid benefits package that helps us recruit and retain talented faculty and staff, and one that is sustainable long-term, which the current benefits package is not.“ — Stephen A. Privett, S.J. , President

4. Who are we?

5. SBTF Membership To highlight a word or phrase, change the font color tored. Do not underline, bold, or italicize the font.

6. SBTF Staff

7. What is our charge?

8. SBTF Charge The Task Force will recommend actions with a goal of maintaining a competitive employee benefits package for full-time faculty and staff at a lower cost to the University.

9. SBTF Charge Specifically, by May 2011, the task force will: • Gather input from the community • Review benefits data • Make recommendations to the President’s • Cabinet consistent with the following principles: • Competitive • Innovative • Financially Sustainable

10. What have we learned: Benefits costs

11. Benefit Cost The cost of benefits has grown disproportionally to salaries over the last ten years. On average, salaries have increased by 6.07% annually, while benefits have increased by an average of 9.03% annually. Currently, USF spends 39 cents on benefits for every $1 of salary for full time faculty and staff.

12. What have we learned: Health care reform

13. Compliance and Opportunity Assessment Redefining the Employer Role Delayed Exit or Differentiated Play • Comply with mandates and reporting • Quantify impacts • Examine opportunities • Mitigate cost trend • Optimize value • Consider accelerated exit for retirees • Positioning for 2014 and 2018 • Play or Pay • Pay — and revisit total rewards plus workforce health resources • Play, but with a differentiated view • Low-wage workers • Dependent subsidization • Execute retiree strategy HC Reform: Three critical time periods Pre-Exchange Post-Exchange Excise Tax 2010 – 2013 2014 – 2017 2018 Compliance and Opportunity Assessment Redefining the Employer Role Revisit Plans • Comply with mandates and reporting • Quantify impacts • Examine opportunities • Employer plans are evaluated in terms of “value” and “affordability” tests • Employers may revise plans • Excise tax exacerbates plan costs • Employers may revise plans

14. What have we learned: Comparative data

15. Comparative Data: Study 1 Overall Findings from Aon Consulting Study comparing USF to 12 other universities: USF offers a very competitive benefits program. USF's overall benefits are substantially better than the peer group.

16. Comparative Data: Better than Peers • Medical Plans: • Legally Domiciled Adult (LDA) eligibility • HMO/Kaiser – fully insured plan • family tier employee contribution • hospital coinsurance • Rx drug benefit & Rx drug mail order plan • PPO/Blue Cross – self insured plan • employee-only tier and family tier contribution • plan deductible • overall plan design, including co pay and coinsurance • out-of-pocket maximum (best in peer group) • Rx drug benefit & Rx drug mail order plan

17. Comparative Data: Better than Peers • Dental Plan • Employee contribution • Overall plan design • Individual plan deductible • Vision Plan • Family tier contribution • Overall plan design • Tuition Remission • Overall plan design • Dependent and LDA coverage • Type of degrees • # of degrees • Waiting period

18. Comparative Data: Better than Peers • Short Term Disability • Benefit percent • Total benefit • Long Term Disability • Monthly benefit maximum • Employee Assistance Program • Number of sessions • Retirement • Contribution formula

19. Comparative Data: Comparable to Peers • Life Insurance • Vacation and Holiday Benefits

20. Comparative Data: Less than Peers • Medical Plans • Types of plans and plan choices • Waiting period • Long Term Disability • Benefit percent • Retirement • Vesting period

21. Comparative Data: Study 2 • Towers Watson health care study: • Providing PPO and HMO options is in line with other institutions, but Account Based Health Plans are becoming more prevalent. • More employers are using four tiers to spread the costs of contributions more equitably, compared to USF’s three tiers.

22. Comparative Data: Study 3 • The Advisory Board Company analyzed 2 yrs of USF medical claim data for the Blue Cross plan • USF is higher than higher ed (by 65%) and national (by 108%) benchmarks in spending/person on medical and pharmacy costs • Significant variability in USF medical costs due to high cost claims • Use of specialty drugs (prescriptions that cost over $600 each) increased by 33% in one year • Use of generic (or therapeutic equivalent) drugs is lower than other universities

23. What have we learned: USF Benefits Survey

24. USF Benefits Survey • Conducted by Towers Watson Consulting Group • Dates: January 31st to February 13th • Number of respondents = 660 or 57% • 91% of surveys passed a validity test • 600 responses included in final analyses

25. USF Benefits Survey: Conjoint Qs • Highest relative sensitivity to changes in: • Health care plan deductible • Health care plan contribution • Moderate relative sensitivity to changes in: • Health care plan provider network • Health care plan type • Retirement contributions and matching • Lowest relative sensitivity to changes in: • Health care plan pharmacy limits and co-pays • Wellness program incentives • Health care plan spousal/LDA surcharge • Tuition remission limits

26. USF Benefits Survey Avg. satisfaction rating of USF benefits package = 8.6 95% = satisfied with the current USF benefits 82% = USF benefits comparable to other organizations where they could find a job and package is competitive 86% = benefits package an important reason why they stayed at USF These results were consistent across the different demographic groups.

27. USF Benefits Survey 56% = little interest in a high-deductible health plan 68% = interest in plan w/no co-pay for maintenance medications + a disease management program 51% = interest in reduced heath care provider network + reduced their payroll contribution 62% = interest in revised dental plan that includes coverage for adult orthodontia and implants

28. USF Benefits Survey Top rankings for benefits in the “other” category: • Long-term disability and Vision (Tied for 1st at 65%) • Long-term care insurance (46%) • Commuter checks and Emeriti retiree health (Tied for 3rd at 39%) • Tuition exchange (33%) • Additional life insurance (28%) **Child care subsidy was inadvertently excluded from the survey**

29. What have we learned: Other practices and market trends

30. Practices and Market Trends Changes that employers are considering include: • Consolidation or replacement of vendors • New financial or performance standards for their health plans • Introduce high deductible plan (e.g., Account Based Health Plan) • Increase the percent share of premiums paid by employee and dependents • Increase deductibles, co-pays, coinsurance, out-of-pocket limits • Use of spousal waivers or surcharges

31. Practices and Market Trends cont. • Increasing the # of tiers in health plans • Increase employee’s cost of brand and generic drugs • Participate in pharmacy purchasing collaborative • Reducing/eliminating employer subsidy for retiree medical coverage (esp. those eligible for Medicare) • Offering an employer match in retirement • Automatically enrolling employees into 403(b) retirement plans • Provide incentives to engage in health-related programs (e.g., wellness, target behavioral outcomes, health risk assessment, & disease management)

32. Options under consideration by the USF SBTF

33. Options: Health Care Add an Account Based Health Plan option Cover 100% of preventive care High-deductible that could be offset with Health Savings account (which the employee owns and balance rolls over) Coinsurance after deductible + maximum for out-of-pocket expenses offers protection to those with serious conditions

34. Options: Health Care Add an Account Based Health Plan option Impact: • In addition to HMO & PPO -> provides more choice • Allows flexibility • Consumer-driven -> accountability & efficiency • Portable • High deductible could be difficult for those with limited funds • Education about health care choices needed • Savings for USF depends on migration into the plan

35. Options: Health Plans Increased co-pay for lab work at hospital instead of low cost lab (PPO/Blue Cross only) Impact: Provides choice Greater efficiency Consumer driven approach Can lead to savings for USF and employee Potential higher cost for employee Inconvenience Administrative burden on USF to manage lab contract

36. Options: Health Create “High” and “Low” plans for Blue Cross • High: • Higher paycheck contribution • Lower deductible, coinsurance, & annual OOP max • Low: • Lower paycheck contribution • Higher deductible, coinsurance, & annual OOP max Impact: • Provides more choice • More contribution -> richer plan • Increase in administrative burden

37. Options: Health Consider a spousal/LDA surcharge for using USF benefits for those with healthcare coverage options outside of USF Impact: Still allows access to USF plan Cost savings for USF Reduces overall USF medical claims Potential higher cost for employee Increase in administrative burden

38. Options: Health Add a fourth tier to benefits coverage: • Keep “Employee” • Keep “Employee + spouse/LDA” • Divide “Employee + family” into • “Employee + children” • “Employee + spouse/LDA + children” Impact: • Contributions based on family size -> more equitable • Contribution will decrease “E + children” and increase for “E + spouse/LDA + children”

39. Options: Health Simplify employee contribution methodology through standardizing rates and salary bands Impact: Equality and balance Decrease administrative burden Contributions will change, with some increasing and others decreasing Require working across multiple groups to bring the rates together

40. Options: Health Bring USF employee contributions for health plan closer to market value Impact: • Will increase employee contributions for some • Cost savings for USF

41. Options: Health Create pharmacy formulary with co-pay differential for drugs Impact: • Cost savings for USF • Consumer driven • Education about plan is needed • Individual with serious conditions may pay more for existing drugs

42. Options: Health Introduce step therapy for drugs (w/MD ability to override use of generic) Impact: • Consumer driven • Potential to lower employee and USF costs • Education needed about plan • Inconvenient for some – includes more steps

43. Options: Health Change the heath plan waiver to encourage those with other coverage options to migrate out of USF plan Impact: • Savings through migration • Could reduce cost claims in future • Some options require initial USF costs until break even point

44. Options: Health Make USF employee contributions for dental plan closer to market value Impact: Will increase employee contributions Cost savings for USF

45. Options: Health Create “High” and “Low” plans for Dental Plan • High: • Paycheck contribution • Increased plan annual maximum + provide adult orthodontia and dental implant benefits • Low: • No paycheck contribution • Current plan with narrower provider network

46. Options: Health Create “High” and “Low” plans for Dental Plan Impact: • Provides more choice • Higher contribution -> richer plan • Add benefit while controlling USF costs • Increase in administrative burden • Network restricted for some

47. Options: Health Provide a wellness strategy and incentives administered by third-party to ensure confidentiality Impact: • Encourages engagement in healthy behavior • Long-term savings through better employee health • Few short-term savings • Cost of incentives • Added administration costs

48. Options: Health Increase life insurance Impact: Additional coverage for employee Additional cost to USF

49. Options: Tuition Remission Require a waiting period & remove payback Impact: Ensures stability/tenure prior to benefit Inline with other institutions Current employees could be impacted Influence employee recruitment Removing payback -> administratively easier, but USF loses investment

50. Options: Tuition Remission Consider limiting eligibility (e.g., type of program, # of degrees, benefit amount) for employee and/or their dependents Impact: Cost savings to USF Brings USF in line with peer institutions Could influence employee retention Could influence employee recruitment